Tuesday, 8 February 2011

California's Famous Claremont Hotel Files for Bankruptcy

Oakland's famous Claremont Hotel and Spa has filed for bankruptcy. The hotel with a number of other luxury properties, were all involved in a single bankruptcy deal. The bankruptcy papers were filed in an attempt to avoid immediate payment of $1.50 billion in debt.

The hotels, which include the Grand Wailea Resort Hotel and Spa in Hawaii, filed bankruptcy papers after lenders seized these from Morgan Stanley Real Estate. In all, the hotels had assets of $2.2 billion, and debt of $1.9 billion. One of the lenders which seized the hotels is Paulson & Co. one of the world's leading hedge funds.

According to Paulson & Co., some of these properties were purchased by Morgan Stanley Real Estate at the peak of their property market, at exceedingly high prices. Since then, the hotels have struggled to stay afloat, not just because of reduced demand in a depressed hospitality industry, but also a number of other market factors.

According to California bankruptcy attorneys, the hospitality industry has been hit particularly hard by the economic downturn. There has been increased unemployment in California, which has severely impacted luxury resorts. There's also been a dip in business and consumer spending, that has impacted hotels and resorts. Besides, fuel prices have increased, which has impacted the cost of equipment, supplies and materials. The economic recession has also caused a decrease in high-end personal travel and business travel. Both kinds of travel have reduced dramatically over the past couple of years, and the result has been a depressed effect on the hospitality industry.

California has borne the brunt of the economic recession, and has seen several hotels and resorts pushed into Chapter 11 bankruptcy. In fact, just last week, the Atlas Hospitality Group estimated that 465 California hotels are currently in default, or have been foreclosed on.